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Cumulative Causation in a Structural Economic Dynamic Approach to Economic Growth and Uneven Development

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  • Araujo, Ricardo

Abstract

The Structural Economic Dynamic approach is distinguished by its simultaneous approach to demand and supply sides of economic growth. However, the idea that growth itself can transform an economy, which became known in the literature as cumulative causation, cannot be properly studied by this framework because technological progress is treated in the same manner as in the traditional Neoclassical model, that is, it is exogenous. Besides, it is the only source of economy growth with no role played by demand in the pace of economic growth but only in the sectoral composition of the economy. Here we introduce Verdoon’s Law in the Pasinetti’s model of structural change thus making it able to study cumulative causation and thus rendering structural changes endogenous in this model.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29960.

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Date of creation: 29 Mar 2011
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Handle: RePEc:pra:mprapa:29960

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Keywords: Cumulative causation; structural change; Verdoon’s law;

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  1. Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
  2. Ricardo Azevedo Araujo & JoanÌlio Rodolpho Teixeira, 2003. "An Extension of the Structural Change Model to International Economic Relations," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 54(4), pages 458-473, November.
  3. Setterfield, Mark, 1997. "'History versus Equilibrium' and the Theory of Economic Growth," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 21(3), pages 365-78, May.
  4. Mark Setterfield, 2010. "Endogenous Growth: A Kaldorian Approach," Working Papers, Trinity College, Department of Economics 1001, Trinity College, Department of Economics.
  5. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
  6. A. P. Thirlwall, 1997. "Reflections on the Concept of Balance-of-Payments-Constrained Growth," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 19(3), pages 377-385, April.
  7. Araujo, Ricardo Azevedo & Teixeira, Joanílio Rodolpho, 2010. "Investment Specific Technological Progress and Structural Change," MPRA Paper, University Library of Munich, Germany 46079, University Library of Munich, Germany.
  8. José A. Alonso & Carlos Garcimartín, 1999. "A New Approach to Balance-of-Payments Constraint: Some Empirical Evidence," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 21(2), pages 259-282, January.
  9. Araujo, Ricardo Azevedo & Teixeira, Joanilio Rodolpho, 2010. "Structural Change and Macrodynamic Capabilities," MPRA Paper, University Library of Munich, Germany 30381, University Library of Munich, Germany.
  10. A. P. Thirlwall, 1983. "A Plain Man's Guide to Kaldor's Growth Laws," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 5(3), pages 345-358, April.
  11. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2007. "A structural economic dynamics approach to balance-of-payments-constrained growth," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 31(5), pages 755-774, September.
  12. Cornwall, John & Cornwall, Wendy, 2002. "A demand and supply analysis of productivity growth," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 13(2), pages 203-229, June.
  13. Boyer, Robert & Petit, Pascal, 1989. "Kaldor's growth theories : past, present and prospects," CEPREMAP Working Papers (Couverture Orange), CEPREMAP 8905, CEPREMAP.
  14. Kaldor, Nicholas, 1972. "The Irrelevance of Equilibrium Economics," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 82(328), pages 1237-55, December.
  15. Reati, Angelo, 1998. "Technological revolutions in Pasinetti's model of structural change: productivity and prices," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 9(2), pages 245-262, June.
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Cited by:
  1. Araujo, Ricardo & Trigg, Andrew, 2013. "A Neo-Kaldorian Approach to Structural Economic Dynamics," MPRA Paper, University Library of Munich, Germany 50370, University Library of Munich, Germany.
  2. Araujo, Ricardo, 2013. "Assessing the Dynamics of Terms of Trade in a Model of Cumulative Causation and Structural Change," MPRA Paper, University Library of Munich, Germany 46049, University Library of Munich, Germany.
  3. Kemp-Benedict, Eric, 2014. "A Kaleckian Model with Intermediate Goods," MPRA Paper, University Library of Munich, Germany 57076, University Library of Munich, Germany.
  4. Trigg, Andrew & Ricardo, Araujo, 2014. "A Multi-sectorial Assessment of the Static Harrod Foreign Trade Multiplier," MPRA Paper, University Library of Munich, Germany 53242, University Library of Munich, Germany.
  5. Hiroshi Nishi, 2014. "A Multi-Sectoral Balance-of-Payments-Constrained Growth Model with Sectoral Heterogeneity:International Competition, Productivity Dynamics, and Economic Growth," Discussion papers, Graduate School of Economics Project Center, Kyoto University e-13-005, Graduate School of Economics Project Center, Kyoto University.

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